Firstly, represent the 316 and E16 as 2 four bit binary numbers (known as nibbles). Once we have this (0011 and 1110 respectively), we can then combine them back together, into one 8-bit 2's compliment binary number (00111110). From here, we can convert this 8-bit binary number to decimal like normal, so it becomes 32+16+8+4+2 = 6210.